Thursday, May 2, 2013

MANUFACTUTING TO PICK UP

Manufacturing activities in India may gain momentum in the coming months, given a pickup in export orders, declining prices and improved operating conditions, a survey said today.
Although the country's manufacturing growth rate fell to its lowest in over four years last month, the export orders picked up and both input and output inflation eased, as per a monthly Purchasing Manager survey conducted by HSBC India and financial information provider Markit. Besides, operating conditions in the Indian manufacturing economy improved further during April and there was a modest increase in incoming new work, the survey said.
The slowing growth rate and declining inflation may prompt the central bank to cut the interest rates tomorrow, although there is not "plenty of scope for RBI to slash rates".
The HSBC Purchasing Managers' Index measures the trends in manufacturing sector every month on the basis of changes in output, new orders, employment, suppliers' delivery times and stocks of purchases. The index fell to 51.0 points in April, the lowest reading recorded since November 2011.
"Growth in manufacturing continued to slow as domestic orders decelerated and power outages curbed output. On the bright side, new export orders picked up and inflation continued to ease," it said. HSBC said that growth needs a boost from further policy reforms and stepped up implementation of infrastructure related investment projects.
Commenting on the survey results, HSBC's Chief Economist for India and ASEAN Leif Eskesen said: "Manufacturing activity lost momentum again in April, with output growth slowing further on the back of a deceleration in domestic orders and continued power outages.
"Export orders, on the other hand, picked up. Encouragingly, input and output price inflation eased. With the growth momentum slowing and inflation receding, the RBI is likely to cut the policy rate this week," he said.

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